11 Best Undervalued Stocks to Invest in According to Reddit

4. lululemon athletica inc. (NASDAQ:LULU)

Number of Hedge Fund Holders: 55

Forward P/E: ~13.2x

lululemon athletica inc. (NASDAQ:LULU) is one of the Best Undervalued Stocks to Invest in According to Reddit. On September 11, HSBC downgraded the company’s stock to “Hold” from “Buy” with a price objective of $175, down from the prior target of $275. As per the firm, lululemon athletica inc. (NASDAQ:LULU) has an uphill battle when it comes to turning around the U.S. business. The company provided a grim FY 2025 outlook because of its ongoing corrective measures, tariff impacts, and the end of De minimis exemption, opines the firm analyst.

In Q2 2025, lululemon athletica inc. (NASDAQ:LULU) surpassed expectations on the EPS, while revenue fell short of its guidance, mainly due to its US business. However, lululemon athletica inc. (NASDAQ:LULU)’s brand and balance sheet remain strong, and it plans to exercise financial discipline and strategically invest in the growth potential. For Q3 2025, it anticipates net revenue of between $2.470 billion – $2.500 billion, reflecting growth of 3% – 4%. Its diluted EPS is expected to be between $2.18 – $2.23 for the quarter.

RGA Investment Advisors, an investment management company, released its Q1 2025 investor letter. Here is what the fund said:

“Late in the quarter, we purchased shares in Lululemon athletica inc. (NASDAQ:LULU), despite uncertainty about the tariff situation. Many of you are familiar with the brand. Lulu is a leading athleisure brand and though competition has increased from upstart offerings like Vuori, Alo and Fabletics, the company has continued to maintain relevance and perform admirably. These upstarts have varied approaches, but in aggregate, they have won share with a combination of faster, more tasteful fashion and cheaper prices. Importantly, this share has predominantly come from Nike–the 10,000 pound gorilla of the industry that continues to see negative topline growth. Even within the competitive landscape, it is notable that Vuori and Alo enthusiasts still consider Lulu core to their wardrobe, given the demonstrable quality advantage of the company’s proprietary fabrics. Although Lulu has benefited from dominance in fashion, its core calling has been performance and that segment of the market remains unquestioned.

For Lulu, U.S. Women’s in particular has slowed, though the company continues to drive growth in the men’s market, while expanding geographically to China and Europe. The slowdown in women’s seems tied both to broader weakness in apparel, particularly athleisure, and to rising competitive pressure – factors that have contributed to investor caution.. Meanwhile, China alone holds the potential to double the scale of Lulu’s business should the company attain a similar degree of resonance as Nike. We are not expecting this to be the case, though it is a notable source of potential upside…” (Click here to read the full text)